Describe your approach to research and how you collect the relevant data for the selection, appointment, and monitoring process.
Research may initially begin with an introduction to the manager and the strategy. Research prioritisation may be based on the views of the researchers and client demand. All relevant firm wide and strategy level data is populated by the managers in Mercer’s Global Investment Manager Database (GIMD). This information aids in the initial research, selection, and monitoring process.
The information collected through GIMD is used as support when meeting with the managers to discuss investment process, portfolio construction, implementation and business management. Following the meeting with the managers, the researcher documents the strategy’s pros and cons through a four-factor framework report, and assigns both an ‘alpha’ rating to the strategy (A, B+ etc. that reflects our conviction in the future performance of the strategy vs benchmark and peers) and an ESG rating (ESG1-4) that reflects our understanding of the degree to which ESG factors are integrated within the investment process. The ratings will typically be peer reviewed by another researcher, and discussed at the Rating Review Committee, which provides challenge and approval for the rating, leveraging the insights of the senior decision makers in the research group.
Describe how you ensure that you are using up-to-date information for the selection, appointment, and monitoring process.
The Mercer manager research team encourages managers to ensure that investment strategy information is up to date in GIMD e.g. all firm wide and strategy specific information. Prior to conducting any meeting with a portfolio manager, our process includes a review of the database, which includes an assessment of latest available portfolio holdings and up to date performance. We will follow up with the managers with any additional requests for information required to assess and monitor the investment strategy. There is also a regular research review period required for all strategies where we have client exposure.